Fulton Financial reports third quarter earnings of $41 million, or $0.24 per share

Diluted earnings per share for the third quarter of 2016 were 24 cents, a 4.3 percent increase from second quarter of 2016 and a 20.0 percent increase from the third quarter of 2015. Pre-provision net revenue of $58.9 million was 10.4 percent higher than the second quarter of 2016 and 19.0 percent higher than the third quarter of 2015.

Net interest income for the third quarter of 2016 increased $1.6 million, or 1.3 percent, compared to the second quarter of 2016 and increased $4.9 million, or 3.9 percent, compared to third quarter of 2015.

Net interest margin decreased six basis points to 3.14 percent compared to the second quarter of 2016, and four basis points compared to the third quarter of 2015.

Loans at September 30, 2016 increased $236.1 million, or 1.7 percent, compared to June 30, 2016 and $854.9 million, or 6.3 percent, compared to September 30, 2015. Average loans for the third quarter of 2016 increased 1.8 percent and 6.3 percent compared to the second quarter of 2016 and the third quarter of 2015, respectively.

Deposits at September 30, 2016 increased $659.9 million, or 4.6 percent, compared to June 30, 2016 and increased $868.1 million, or 6.2 percent, compared to September 30, 2015. Average deposits for the third quarter of 2016 increased 2.5 percent compared to the second quarter of 2016, and increased 5.9 percent compared to the third quarter of 2015.

The provision for credit losses in the third quarter of 2016 was $4.1 million, compared to a $2.5 million provision in the second quarter of 2016 and a $1.0 million provision in the third quarter of 2015.

Non-interest income, excluding investment securities gains, increased $2.1 million, or 4.5 percent, in comparison to the second quarter of 2016, and increased $5.1 million, or 11.9 percent, in comparison to the third quarter of 2015.

Non-interest expense decreased $1.8 million, or 1.5 percent, compared to the second quarter of 2016 and, excluding the loss on redemption of trust preferred securities recognized in the third quarter of 2015, increased $585,000, or 0.5 percent, compared to the third quarter of 2015.

Fulton Financial Corporation (NASDAQ: FULT) reported net income of $41.5 million, or 24 cents per diluted share, for the third quarter of 2016.

"We were pleased with the third quarter results as we were able to grow earnings per share by 4.3 percent linked quarter," said E. Philip Wenger, Chairman, President and CEO. "Despite a challenging interest rate and operating environment, we were able to grow revenues and reduce expenses, which enabled us to drive positive operating leverage for the quarter."

Net Interest Income and MarginNet interest income for the third quarter of 2016 increased $1.6 million, or 1.3 percent, from the second quarter of 2016. Net interest margin decreased six basis points, or 1.9 percent, to 3.14 percent in the third quarter of 2016, from 3.20 percent in the second quarter of 2016. The average yield on interest-earning assets decreased six basis points, while the average cost of interest-bearing liabilities remained unchanged, during the third quarter of 2016 in comparison to the second quarter of 2016.

Average Balance SheetTotal average assets for the third quarter of 2016 were $18.6 billion, an increase of $439.1 million from the second quarter of 2016. Average loans, net of unearned income, increased $246.2 million, or 1.8 percent, in comparison to the second quarter of 2016. Average loans and yields, by type, for the third quarter of 2016 in comparison to the second quarter of 2016, are summarized in the following table:

Total average liabilities increased $408.4 million, or 2.5 percent, from the second quarter of 2016, while average deposits increased $357.2 million, or 2.5 percent. Average deposits and interest rates, by type, for the third quarter of 2016 in comparison to the second quarter of 2016, are summarized in the following table:

Three Months Ended

Increase (decrease)

September 30, 2016

June 30, 2016

in Balance

Balance

Rate

Balance

Rate

$

%

(dollars in thousands)

Average Deposits, by type:

Noninterest-bearing demand

$

4,227,639

-

%

$

4,077,642

-

%

$

149,997

3.7

%

Interest-bearing demand

3,602,448

0.19

%

3,454,031

0.18

%

148,417

4.3

%

Savings deposits

4,078,942

0.20

%

3,989,988

0.19

%

88,954

2.2

%

Total average demand and savings

11,909,029

0.13

%

11,521,661

0.12

%

387,368

3.4

%

Time deposits

2,814,258

1.07

%

2,844,434

1.06

%

(30,176

)

(1.1

%)

Total Average Deposits

$

14,723,287

0.31

%

$

14,366,095

0.30

%

$

357,192

2.5

%

Asset QualityNon-performing assets were $150.1 million, or 0.80 percent of total assets, at September 30, 2016, compared to $139.7 million, or 0.76 percent of total assets, at June 30, 2016 and $155.6 million, or 0.87 percent of total assets, at September 30, 2015.

Annualized net charge-offs for the quarter ended September 30, 2016 were 0.11 percent of total average loans, compared to 0.10 percent for the quarter ended June 30, 2016 and 0.03 percent for the quarter ended September 30, 2015. The allowance for credit losses as a percentage of non-performing loans was 119.6 percent at September 30, 2016, as compared to 129.3 percent at June 30, 2016 and 116.8 percent at September 30, 2015.

During the third quarter of 2016, the Corporation recorded a $4.1 million provision for credit losses, compared to a $2.5 million provision in the second quarter of 2016 and a $1.0 million provision in the third quarter of 2015.

Non-interest Income Non-interest income, excluding investment securities gains, increased $2.1 million, or 4.5 percent, in comparison to the second quarter of 2016. Other service charges and fees increased $1.4 million, or 11.0 percent, due to increases in commercial loan interest rate swap fees. Mortgage banking income increased $632,000, or 16.2 percent, primarily driven by gains on sales of loans as a result of higher volumes of new loan commitments. During the third quarter of 2016, an additional $1.3 million mortgage servicing rights impairment charge was recorded, compared to $1.7 million impairment charge in the prior quarter, as a reduction to mortgage banking income.

Gains on sales of investment securities decreased $74,000 in comparison to the second quarter of 2016, and decreased $1.7 million from the third quarter of 2015.

Non-interest ExpenseNon-interest expense decreased $1.8 million, or 1.5 percent, in the third quarter of 2016, compared to the second quarter of 2016. Decreases occurred in FDIC insurance expense, data processing, professional fees and operating risk loss, partially offset by increases in salaries and employee benefits, other real estate owned and repossession expense and other outside services.

In the third quarter of 2015, the Corporation incurred a $5.6 million loss on the redemption of trust preferred securities. Excluding this loss, non-interest expense remained relatively flat in the third quarter of 2016 compared to the prior year with increases in salaries and employee benefits and occupancy expense, offset by decreases in other outside services, FDIC insurance expense, and operating risk loss.

The Corporation's investment management and trust services are offered at all banks through Fulton Financial Advisors, a division of Fulton Bank, N.A. Residential mortgage lending is offered by all banks under the Fulton Mortgage Company brand.

Additional information on Fulton Financial Corporation is available on the Internet atwww.fult.com.

Safe Harbor StatementThis news release may contain forward-looking statements with respect to the
Corporation's financial condition, results of operations and business. Do not unduly rely on forward-looking statements. Forward-looking statements can be identified by the use of words such as "may," "should," "will," "could," "estimates," "predicts," "potential," "continue," "anticipates," "believes," "plans," "expects," "future," "intends" and similar expressions which are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, some of which are beyond the Corporation's control and ability to predict, that could cause actual results to differ materially from those expressed in the forward-looking statements.

A discussion of certain risks and uncertainties affecting the Corporation, and some of the factors that could cause the Corporation's actual results to differ materially from those described in the forward-looking statements, can be found in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2015 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2016 and June 30, 2016, which have been filed with the Securities and Exchange Commission and are available in the Investor Relations section of the Corporation's website (www.fult.com) and on the Securities and Exchange Commission's website (www.sec.gov). The Corporation undertakes no obligation, other than as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

The Corporation uses certain non-GAAP financial measures in this earnings release. These non-GAAP financial measures are reconciled to the most comparable GAAP measures in tables at the end of this release.

FULTON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED ENDING BALANCE SHEETS (UNAUDITED)

dollars in thousands

% Change from

September 30

June 30

March 31

December 31

September 30

June 30

September 30

2016

2016

2016

2015

2015

2016

2015

ASSETS

Cash and due from banks

$

86,497

$

84,647

$

83,479

$

101,120

$

93,803

2.2

%

(7.8

%)

Other interest-earning assets

428,966

408,086

408,060

292,516

579,920

5.1

%

(26.0

%)

Loans held for sale

27,836

34,330

19,719

16,886

26,937

(18.9

%)

3.3

%

Investment securities

2,508,068

2,529,724

2,516,205

2,484,773

2,436,337

(0.9

%)

2.9

%

Loans, net of unearned income

14,391,238

14,155,159

13,870,701

13,838,602

13,536,361

1.7

%

6.3

%

Allowance for loan losses

(162,526

)

(162,546

)

(163,841

)

(169,054

)

(167,136

)

0.0

%

(2.8

%)

Net loans

14,228,712

13,992,613

13,706,860

13,669,548

13,369,225

1.7

%

6.4

%

Premises and equipment

228,009

228,861

228,057

225,535

225,705

(0.4

%)

1.0

%

Accrued interest receivable

43,600

43,316

44,379

42,767

42,846

0.7

%

1.8

%

Goodwill and intangible assets

531,556

531,556

531,556

531,556

531,562

0.0

%

0.0

%

Other assets

617,818

626,902

583,939

550,017

531,724

(1.4

%)

16.2

%

Total Assets

$

18,701,062

$

18,480,035

$

18,122,254

$

17,914,718

$

17,838,059

1.2

%

4.8

%

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits

$

14,952,479

$

14,292,564

$

14,404,280

$

14,132,317

$

14,084,394

4.6

%

6.2

%

Short-term borrowings

264,042

722,214

352,883

497,663

431,631

(63.4

%)

(38.8

%)

Other liabilities

389,819

392,708

326,128

293,302

316,697

(0.7

%)

23.1

%

FHLB advances and long-term debt

965,286

965,552

965,654

949,542

979,433

0.0

%

(1.4

%)

Total Liabilities

16,571,626

16,373,038

16,048,945

15,872,824

15,812,155

1.2

%

4.8

%

Shareholders' equity

2,129,436

2,106,997

2,073,309

2,041,894

2,025,904

1.1

%

5.1

%

Total Liabilities and Shareholders' Equity

$

18,701,062

$

18,480,035

$

18,122,254

$

17,914,718

$

17,838,059

1.2

%

4.8

%

LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL:

Loans, by type:

Real estate - commercial mortgage

$

5,818,915

$

5,635,347

$

5,558,108

$

5,462,330

$

5,339,928

3.3

%

9.0

%

Commercial - industrial, financial and agricultural

4,024,119

4,099,177

4,035,333

4,088,962

3,929,908

(1.8

%)

2.4

%

Real estate - home equity

1,640,421

1,647,319

1,659,481

1,684,439

1,693,649

(0.4

%)

(3.1

%)

Real estate - residential mortgage

1,542,696

1,447,292

1,377,459

1,376,160

1,382,085

6.6

%

11.6

%

Real estate - construction

861,634

853,699

810,872

799,988

769,565

0.9

%

12.0

%

Consumer

283,673

278,071

263,221

268,588

271,696

2.0

%

4.4

%

Leasing and other

219,780

194,254

166,227

158,135

149,530

13.1

%

47.0

%

Total Loans, net of unearned income

$

14,391,238

$

14,155,159

$

13,870,701

$

13,838,602

$

13,536,361

1.7

%

6.3

%

Deposits, by type:

Noninterest-bearing demand

$

4,210,099

$

4,125,375

$

4,134,861

$

3,948,114

$

3,906,228

2.1

%

7.8

%

Interest-bearing demand

3,703,048

3,358,536

3,430,206

3,451,207

3,362,336

10.3

%

10.1

%

Savings deposits

4,235,015

3,986,008

3,972,199

3,868,046

3,880,103

6.2

%

9.1

%

Time deposits

2,804,317

2,822,645

2,867,014

2,864,950

2,935,727

(0.6

%)

(4.5

%)

Total Deposits

$

14,952,479

$

14,292,564

$

14,404,280

$

14,132,317

$

14,084,394

4.6

%

6.2

%

Short-term borrowings, by type:

Customer repurchase agreements

$

189,727

$

168,521

$

162,431

$

111,496

$

145,225

12.6

%

30.6

%

Customer short-term promissory notes

65,871

69,509

76,807

78,932

80,879

(5.2

%)

(18.6

%)

Short-term FHLB advances

-

35,000

81,000

110,000

200,000

(100.0

%)

(100.0

%)

Federal funds purchased

8,444

449,184

32,645

197,235

5,527

(98.1

%)

52.8

%

Total Short-term Borrowings

$

264,042

$

722,214

$

352,883

$

497,663

$

431,631

(63.4

%)

(38.8

%)

FULTON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

in thousands, except per-share data and percentages

Three Months Ended

% Change from

Nine Months Ended

Sep 30

Jun 30

Mar 31

Dec 31

Sep 30

Jun 30

Sep 30

Sep 30

2016

2016

2016

2015

2015

2016

2015

2016

2015

% Change

Interest Income:

Interest income

$

151,468

$

149,309

$

149,311

$

147,560

$

146,228

1.4

%

3.6

%

$

450,088

$

436,229

3.2

%

Interest expense

20,903

20,393

20,257

19,761

20,534

2.5

%

1.8

%

61,553

64,034

(3.9

%)

Net Interest Income

130,565

128,916

129,054

127,799

125,694

1.3

%

3.9

%

388,535

372,195

4.4

%

Provision for credit losses

4,141

2,511

1,530

2,750

1,000

64.9

%

N/M

8,182

(500

)

N/M

Net Interest Income after Provision

126,424

126,405

127,524

125,049

124,694

0.0

%

1.4

%

380,353

372,695

2.1

%

Non-Interest Income:

Other service charges and fees

14,407

12,983

10,750

12,676

10,965

11.0

%

31.4

%

38,140

31,316

21.8

%

Service charges on deposit accounts

13,078

12,896

12,558

12,909

12,982

1.4

%

0.7

%

38,532

37,188

3.6

%

Investment management and trust services

11,425

11,247

10,988

10,919

11,237

1.6

%

1.7

%

33,660

33,137

1.6

%

Mortgage banking income

4,529

3,897

4,030

4,317

3,864

16.2

%

17.2

%

12,456

13,891

(10.3

%)

Other

4,708

5,038

3,864

4,242

3,996

(6.6

%)

17.8

%

13,610

12,178

11.8

%

Non-Interest Income before Investment Securities Gains

48,147

46,061

42,190

45,063

43,044

4.5

%

11.9

%

136,398

127,710

6.8

%

Investment securities gains

2

76

947

776

1,730

(97.4

%)

(99.9

%)

1,025

8,290

(87.6

%)

Total Non-Interest Income

48,149

46,137

43,137

45,839

44,774

4.4

%

7.5

%

137,423

136,000

1.0

%

Non-Interest Expense:

Salaries and employee benefits

70,696

70,029

69,372

65,467

65,308

1.0

%

8.3

%

210,097

195,365

7.5

%

Net occupancy expense

11,782

11,811

12,220

11,566

10,710

(0.2

%)

10.0

%

35,813

36,211

(1.1

%)

Other outside services

5,783

5,508

6,056

6,537

7,373

5.0

%

(21.6

%)

17,347

21,248

(18.4

%)

Data processing

4,610

5,476

5,400

5,127

5,105

(15.8

%)

(9.7

%)

15,486

14,767

4.9

%

Software

4,117

3,953

3,921

4,068

3,984

4.1

%

3.3

%

11,991

10,678

12.3

%

Equipment expense

3,137

2,872

3,371

3,626

3,595

9.2

%

(12.7

%)

9,380

10,888

(13.9

%)

Professional fees

2,535

3,353

2,333

2,814

2,828

(24.4

%)

(10.4

%)

8,221

8,430

(2.5

%)

FDIC insurance expense

1,791

2,960

2,949

2,896

2,867

(39.5

%)

(37.5

%)

7,700

8,574

(10.2

%)

Marketing

1,774

1,916

1,624

1,754

2,102

(7.4

%)

(15.6

%)

5,314

5,570

(4.6

%)

Other real estate owned and repossession expense

742

365

638

1,123

1,016

103.3

%

(27.0

%)

1,745

2,507

(30.4

%)

Operating risk loss

556

986

540

987

1,136

(43.6

%)

(51.1

%)

2,082

2,637

(21.0

%)

Intangible amortization

-

-

-

6

5

-

N/M

-

241

N/M

Loss on redemption of trust preferred securities

-

-

-

-

5,626

-

N/M

-

5,626

N/M

Other

12,325

12,408

11,989

12,468

13,234

(0.7

%)

(6.9

%)

36,722

38,979

(5.8

%)

Total Non-Interest Expense

119,848

121,637

120,413

118,439

124,889

(1.5

%)

(4.0

%)

361,898

361,721

0.0

%

Income before Income Taxes

54,725

50,905

50,248

52,449

44,579

7.5

%

22.8

%

155,878

146,974

6.1

%

Income tax expense

13,257

11,155

11,991

13,914

10,328

18.8

%

28.4

%

36,403

36,007

1.1

%

Net Income

$

41,468

$

39,750

$

38,257

$

38,535

$

34,251

4.3

%

21.1

%

$

119,475

$

110,967

7.7

%

PER SHARE:

Net income:

Basic

$

0.24

$

0.23

$

0.22

$

0.22

$

0.20

4.3

%

20.0

%

$

0.69

$

0.63

9.5

%

Diluted

0.24

0.23

0.22

0.22

0.20

4.3

%

20.0

%

0.69

0.63

9.5

%

Cash dividends

$

0.10

$

0.10

$

0.09

$

0.11

$

0.09

-

11.1

%

$

0.29

$

0.27

7.4

%

Shareholders' equity

12.30

12.17

11.96

11.72

11.66

1.1

%

5.5

%

12.30

11.66

5.5

%

Shareholders' equity (tangible)

9.23

9.10

8.89

8.67

8.60

1.4

%

7.3

%

9.23

8.60

7.3

%

Weighted average shares (basic)

173,020

173,394

173,331

173,709

174,338

(0.2

%)

(0.8

%)

173,248

176,399

(1.8

%)

Weighted average shares (diluted)

174,064

174,318

174,416

174,833

175,342

(0.1

%)

(0.7

%)

174,265

177,428

(1.8

%)

Shares outstanding, end of period

173,144

173,139

173,393

174,176

173,771

0.0

%

(0.4

%)

173,144

173,771

(0.4

%)

SELECTED FINANCIAL RATIOS:

Return on average assets

0.89

%

0.88

%

0.86

%

0.86

%

0.78

%

0.87

%

0.86

%

Return on average shareholders' equity

7.78

%

7.65

%

7.47

%

7.51

%

6.72

%

7.64

%

7.33

%

Return on average shareholders' equity (tangible)

10.38

%

10.26

%

10.07

%

10.16

%

9.11

%

10.24

%

9.96

%

Net interest margin

3.14

%

3.20

%

3.23

%

3.19

%

3.18

%

3.19

%

3.22

%

Efficiency ratio

65.16

%

67.59

%

68.33

%

66.63

%

68.82

%

67.01

%

69.30

%

N/M - Not meaningful

FULTON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED)

dollars in thousands

Three Months Ended

September 30, 2016

June 30, 2016

September 30, 2015

Average

Yield/

Average

Yield/

Average

Yield/

Balance

Interest (1)

Rate

Balance

Interest (1)

Rate

Balance

Interest (1)

Rate

ASSETS

Interest-earning assets:

Loans, net of unearned income

$

14,212,250

$

140,434

3.93

%

$

13,966,024

$

138,317

3.98

%

$

13,369,874

$

135,268

4.02

%

Taxable investment securities

2,110,084

10,872

2.06

%

2,127,780

11,159

2.10

%

2,148,403

11,252

2.09

%

Tax-exempt investment securities

344,231

3,923

4.56

%

314,851

3,570

4.54

%

230,178

2,929

5.09

%

Equity securities

14,209

196

5.50

%

14,220

185

5.23

%

18,280

257

5.58

%

Total Investment Securities

2,468,524

14,991

2.43

%

2,456,851

14,914

2.43

%

2,396,861

14,438

2.41

%

Loans held for sale

22,593

210

3.72

%

19,449

188

3.87

%

20,704

194

3.74

%

Other interest-earning assets

501,666

1,051

0.84

%

357,211

864

0.96

%

477,145

884

0.74

%

Total Interest-earning Assets

17,205,033

156,686

3.63

%

16,799,535

154,283

3.69

%

16,264,584

150,784

3.68

%

Noninterest-earning assets:

Cash and due from banks

101,927

100,860

104,622

Premises and equipment

227,906

227,517

226,446

Other assets

1,219,844

1,189,226

1,097,600

Less: allowance for loan losses

(163,074

)

(164,573

)

(168,770

)

Total Assets

$

18,591,636

$

18,152,565

$

17,524,482

LIABILITIES AND SHAREHOLDERS' EQUITY

Interest-bearing liabilities:

Demand deposits

$

3,602,448

$

1,706

0.19

%

$

3,454,031

$

1,527

0.18

%

$

3,316,532

$

1,122

0.13

%

Savings deposits

4,078,942

2,042

0.20

%

3,989,988

1,886

0.19

%

3,714,282

1,436

0.15

%

Time deposits

2,814,258

7,562

1.07

%

2,844,434

7,474

1.06

%

2,963,774

7,659

1.03

%

Total Interest-bearing Deposits

10,495,648

11,310

0.43

%

10,288,453

10,887

0.43

%

9,994,588

10,217

0.41

%

Short-term borrowings

426,369

254

0.23

%

403,669

217

0.21

%

324,685

92

0.11

%

FHLB advances and long-term debt

965,228

9,338

3.86

%

965,526

9,289

3.86

%

996,247

10,225

4.09

%

Total Interest-bearing Liabilities

11,887,245

20,902

0.70

%

11,657,648

20,393

0.70

%

11,315,520

20,534

0.72

%

Noninterest-bearing liabilities:

Demand deposits

4,227,639

4,077,642

3,904,176

Other

356,156

327,360

281,957

Total Liabilities

16,471,040

16,062,650

15,501,653

Shareholders' equity

2,120,596

2,089,915

2,022,829

Total Liabilities and Shareholders' Equity

$

18,591,636

$

18,152,565

$

17,524,482

Net interest income/net interest margin (fully taxable equivalent)

135,784

3.14

%

133,890

3.20

%

130,250

3.18

%

Tax equivalent adjustment

(5,219

)

(4,974

)

(4,556

)

Net interest income

$

130,565

$

128,916

$

125,694

(1)

Presented on a tax-equivalent basis using a 35% Federal tax rate and statutory interest expense disallowances.

AVERAGE LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL:

Three Months Ended

% Change from

September 30

June 30

March 31

December 31

September 30

June 30

September 30

2016

2016

2016

2015

2015

2016

2015

Loans, by type:

Real estate - commercial mortgage

$

5,670,888

$

5,557,680

$

5,487,421

$

5,365,640

$

5,242,021

2.0

%

8.2

%

Commercial - industrial, financial and agricultural

4,066,275

4,080,524

4,095,268

4,035,287

3,887,161

(0.3

%)

4.6

%

Real estate - home equity

1,640,913

1,656,140

1,674,032

1,694,455

1,692,860

(0.9

%)

(3.1

%)

Real estate - residential mortgage

1,503,209

1,399,851

1,381,409

1,377,116

1,381,141

7.4

%

8.8

%

Real estate - construction

837,920

820,881

792,014

765,555

753,584

2.1

%

11.2

%

Consumer

281,517

272,293

263,295

267,726

270,391

3.4

%

4.1

%

Leasing and other

211,528

178,655

159,981

153,487

142,716

18.4

%

48.2

%

Total Loans, net of unearned income

$

14,212,250

$

13,966,024

$

13,853,420

$

13,659,266

$

13,369,874

1.8

%

6.3

%

Deposits, by type:

Noninterest-bearing demand

$

4,227,639

$

4,077,642

$

3,967,887

$

3,999,118

$

3,904,176

3.7

%

8.3

%

Interest-bearing demand

3,602,448

3,454,031

3,438,355

3,411,904

3,316,532

4.3

%

8.6

%

Savings deposits

4,078,942

3,989,988

3,932,824

3,903,741

3,714,282

2.2

%

9.8

%

Time deposits

2,814,258

2,844,434

2,867,651

2,903,715

2,963,774

(1.1

%)

(5.0

%)

Total Deposits

$

14,723,287

$

14,366,095

$

14,206,717

$

14,218,478

$

13,898,764

2.5

%

5.9

%

Short-term borrowings, by type:

Customer repurchase agreements

$

187,588

$

180,595

$

171,408

$

142,004

$

149,415

3.9

%

25.5

%

Customer short-term promissory notes

70,072

77,535

74,013

80,568

79,308

(9.6

%)

(11.6

%)

Federal funds purchased

148,546

138,012

183,970

44,468

85,092

7.6

%

74.6

%

Short-term FHLB advances and other borrowings

20,163

7,527

16,011

14,457

10,870

167.9

%

85.5

%

Total Short-term Borrowings

$

426,369

$

403,669

$

445,402

$

281,497

$

324,685

5.6

%

31.3

%

FULTON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED AVERAGE BALANCE SHEET ANALYSIS (UNAUDITED)

dollars in thousands

Nine Months Ended September 30

2016

2015

Average

Average

Balance

Interest (1)

Yield/Rate

Balance

Interest (1)

Yield/Rate

ASSETS

Interest-earning assets:

Loans, net of unearned income

$

14,011,301

$

416,646

3.97

%

$

13,220,339

$

401,662

4.06

%

Taxable investment securities

2,139,378

34,034

2.12

%

2,068,025

33,478

2.16

%

Tax-exempt investment securities

306,298

10,631

4.63

%

225,209

9,035

5.35

%

Equity securities

14,272

599

5.60

%

25,985

1,086

5.59

%

Total Investment Securities

2,459,948

45,264

2.45

%

2,319,219

43,599

2.51

%

Loans held for sale

18,114

529

3.90

%

21,360

632

3.94

%

Other interest-earning assets

406,163

2,813

0.92

%

463,545

3,922

1.13

%

Total Interest-earning Assets

16,895,526

465,252

3.68

%

16,024,463

449,815

3.75

%

Noninterest-earning assets:

Cash and due from banks

100,417

104,870

Premises and equipment

227,237

226,469

Other assets

1,182,260

1,101,856

Less: allowance for loan losses

(164,999

)

(176,205

)

Total Assets

$

18,240,441

$

17,281,453

LIABILITIES AND SHAREHOLDERS' EQUITY

Interest-bearing liabilities:

Demand deposits

$

3,498,659

$

4,727

0.18

%

$

3,202,380

$

3,092

0.13

%

Savings deposits

4,000,871

5,732

0.19

%

3,600,695

3,802

0.14

%

Time deposits

2,842,011

22,465

1.06

%

3,017,271

23,199

1.03

%

Total Interest-bearing Deposits

10,341,541

32,924

0.43

%

9,820,346

30,093

0.41

%

Short-term borrowings

425,151

739

0.23

%

338,019

272

0.11

%

FHLB advances and long-term debt

962,997

27,889

3.86

%

1,048,634

33,669

4.29

%

Total Interest-bearing Liabilities

11,729,689

61,552

0.70

%

11,206,999

64,034

0.76

%

Noninterest-bearing liabilities:

Demand deposits

4,091,555

3,767,919

Other

329,315

282,983

Total Liabilities

16,150,559

15,257,901

Shareholders' equity

2,089,882

2,023,552

Total Liabilities and Shareholders' Equity

$

18,240,441

$

17,281,453

Net interest income/net interest margin (fully taxable equivalent)

403,700

3.19

%

385,781

3.22

%

Tax equivalent adjustment

(15,165

)

(13,586

)

Net interest income

$

388,535

$

372,195

(1)

Presented on a tax-equivalent basis using a 35% Federal tax rate and statutory interest expense disallowances.

AVERAGE LOANS, DEPOSITS AND SHORT-TERM BORROWINGS DETAIL:

Nine Months Ended

September 30

2016

2015

% Change

Loans, by type:

Real estate - commercial mortgage

$

5,572,356

$

5,205,755

7.0

%

Commercial - industrial, financial and agricultural

4,080,638

3,831,678

6.5

%

Real estate - home equity

1,656,969

1,703,006

(2.7

%)

Real estate - residential mortgage

1,428,430

1,369,367

4.3

%

Real estate - construction

817,014

713,893

14.4

%

Consumer

272,402

265,002

2.8

%

Leasing and other

183,492

131,638

39.4

%

Total Loans, net of unearned income

$

14,011,301

$

13,220,339

6.0

%

Deposits, by type:

Noninterest-bearing demand

$

4,091,555

$

3,767,919

8.6

%

Interest-bearing demand

3,498,659

3,202,380

9.3

%

Savings deposits

4,000,871

3,600,695

11.1

%

Time deposits

2,842,011

3,017,271

(5.8

%)

Total Deposits

$

14,433,096

$

13,588,265

6.2

%

Short-term borrowings, by type:

Customer repurchase agreements

$

179,892

$

167,526

7.4

%

Customer short-term promissory notes

73,859

81,854

(9.8

%)

Federal funds purchased

156,812

72,961

114.9

%

Short-term FHLB advances and other borrowings

14,588

15,678

(7.0

%)

Total Short-term Borrowings

$

425,151

$

338,019

25.8

%

FULTON FINANCIAL CORPORATION

ASSET QUALITY INFORMATION (UNAUDITED)

dollars in thousands

Three Months Ended

Nine Months Ended

Sep 30

Jun 30

Mar 31

Dec 31

Sep 30

Sep 30

Sep 30

2016

2016

2016

2015

2015

2016

2015

ALLOWANCE FOR CREDIT LOSSES:

Balance at beginning of period

$

165,108

$

166,065

$

171,412

$

169,395

$

169,453

$

171,412

$

185,931

Loans charged off:

Commercial - industrial, financial and agricultural

(3,144

)

(4,625

)

(6,188

)

(970

)

(1,640

)

(13,957

)

(14,669

)

Consumer and home equity

(1,394

)

(1,614

)

(2,548

)

(1,466

)

(1,590

)

(5,556

)

(4,365

)

Real estate - commercial mortgage

(1,350

)

(1,474

)

(582

)

(1,207

)

(660

)

(3,406

)

(3,011

)

Real estate - residential mortgage

(802

)

(340

)

(1,068

)

(513

)

(1,035

)

(2,210

)

(3,099

)

Real estate - construction

(150

)

(742

)

(326

)

-

(114

)

(1,218

)

(201

)

Leasing and other

(832

)

(1,951

)

(443

)

(1,304

)

(522

)

(3,226

)

(1,352

)

Total loans charged off

(7,672

)

(10,746

)

(11,155

)

(5,460

)

(5,561

)

(29,573

)

(26,697

)

Recoveries of loans previously charged off:

Commercial - industrial, financial and agricultural

1,539

2,931

2,319

1,409

1,598

6,789

3,855

Consumer and home equity

463

889

534

825

618

1,886

1,667

Real estate - commercial mortgage

296

1,367

825

1,072

842

2,488

1,729

Real estate - residential mortgage

228

420

136

775

201

784

547

Real estate - construction

898

1,563

383

548

898

2,844

2,276

Leasing and other

168

108

81

98

346

357

587

Recoveries of loans previously charged off

3,592

7,278

4,278

4,727

4,503

15,148

10,661

Net loans charged off

(4,080

)

(3,468

)

(6,877

)

(733

)

(1,058

)

(14,425

)

(16,036

)

Provision for credit losses

4,141

2,511

1,530

2,750

1,000

8,182

(500

)

Balance at end of period

$

165,169

$

165,108

$

166,065

$

171,412

$

169,395

$

165,169

$

169,395

Net charge-offs to average loans (annualized)

0.11

%

0.10

%

0.20

%

0.02

%

0.03

%

0.14

%

0.16

%

NON-PERFORMING ASSETS:

Non-accrual loans

$

124,017

$

111,742

$

122,170

$

129,523

$

132,154

Loans 90 days past due and accruing

14,095

15,992

15,013

15,291

12,867

Total non-performing loans

138,112

127,734

137,183

144,814

145,021

Other real estate owned

11,981

11,918

10,946

11,099

10,561

Total non-performing assets

$

150,093

$

139,652

$

148,129

$

155,913

$

155,582

NON-PERFORMING LOANS, BY TYPE:

Commercial - industrial, financial and agricultural

$

47,330

$

38,902

$

39,140

$

44,071

$

38,032

Real estate - commercial mortgage

39,631

35,704

43,132

41,170

49,021

Real estate - residential mortgage

23,451

25,030

25,182

28,484

27,707

Consumer and home equity

16,426

16,061

16,210

17,123

15,186

Real estate - construction

11,223

11,879

12,005

12,460

14,989

Leasing

51

158

1,514

1,506

86

Total non-performing loans

$

138,112

$

127,734

$

137,183

$

144,814

$

145,021

TROUBLED DEBT RESTRUCTURINGS (TDRs), BY TYPE:

Real-estate - residential mortgage

$

26,854

$

27,324

$

27,565

$

28,511

$

29,330

Real-estate - commercial mortgage

16,085

17,808

17,427

17,563

17,282

Consumer and home equity

7,707

7,191

6,562

4,589

3,983

Commercial - industrial, financial and agricultural

7,488

5,756

5,650

5,953

7,399

Real estate - construction

843

3,086

3,092

3,942

4,363

Total accruing TDRs

58,977

61,165

60,296

60,558

62,357

Non-accrual TDRs (1)

27,904

24,887

27,277

31,035

27,618

Total TDRs

$

86,881

$

86,052

$

87,573

$

91,593

$

89,975

(1)

Included within non-accrual loans above.

Total Delinquency %

DELINQUENCY RATES, BY TYPE:

Sep 30

Jun 30

Mar 31

Dec 31

Sep 30

2016

2016

2016

2015

2015

Real estate - commercial mortgage

0.87

%

0.81

%

0.93

%

0.91

%

1.08

%

Commercial - industrial, financial and agricultural

1.48

%

1.25

%

1.46

%

1.27

%

1.32

%

Real estate - construction

1.61

%

1.93

%

2.00

%

1.87

%

2.25

%

Real estate - residential mortgage

2.67

%

2.70

%

3.10

%

3.40

%

3.27

%

Consumer, home equity, leasing and other

1.53

%

1.47

%

1.48

%

1.58

%

1.41

%

Total

1.38

%

1.30

%

1.44

%

1.41

%

1.49

%

ASSET QUALITY RATIOS:

Sep 30

Jun 30

Mar 31

Dec 31

Sep 30

2016

2016

2016

2015

2015

Non-accrual loans to total loans

0.86

%

0.79

%

0.88

%

0.94

%

0.98

%

Non-performing loans to total loans

0.96

%

0.90

%

0.99

%

1.05

%

1.07

%

Non-performing assets to total loans and OREO

1.04

%

0.99

%

1.07

%

1.13

%

1.15

%

Non-performing assets to total assets

0.80

%

0.76

%

0.82

%

0.87

%

0.87

%

Allowance for credit losses to loans outstanding

1.15

%

1.17

%

1.20

%

1.24

%

1.25

%

Allowance for credit losses to non-performing loans

119.59

%

129.26

%

121.05

%

118.37

%

116.81

%

Non-performing assets to tangible common shareholders' equity and allowance for credit losses

8.51

%

8.02

%

8.67

%

9.27

%

9.35

%

FULTON FINANCIAL CORPORATION

RECONCILIATION OF GAAP TO NON-GAAP MEASURES (UNAUDITED)

in thousands, except per share data and percentages

Explanatory note:

This press release contains supplemental financial information, as detailed below, which has been derived by methods other than Generally Accepted Accounting Principles ("GAAP"). The Corporation has presented these non-GAAP financial measures because it believes that these measures provide useful and comparative information to assess trends in the Corporation's results of operations. Presentation of these non-GAAP financial measures is consistent with how the Corporation evaluates its performance internally and these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the Corporation's industry. Management believes that these non-GAAP financial measures, in addition to GAAP measures, are also useful to investors to evaluate the Corporation's results. Investors should recognize that the Corporation's presentation of these non-GAAP financial measures might not be comparable to similarly-titled measures of other companies. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures, and the Corporation strongly encourages a review of its condensed consolidated financial statements in their entirety. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measure follow: